(EDGAR Online via COMTEX) -- Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations The following discussion of our financial condition and results of operations contains forward-looking statements within the meaning of the federal securities laws that involve material risks and uncertainties. This discussion should be read in conjunction with "A Warning About Forward-Looking Statements" on page 3 and "Risk Factors" in this Annual Report. In addition, our discussion of the financial condition and results of operations of Quidel Corporation in this Item 7 should be read in conjunction with our Consolidated Financial Statements and the related Notes included elsewhere in this Annual Report. Discussions of year-to-year comparisons between 2019 and 2018 that are not included in this Annual Report can be found in our Annual Report for the year ended December 31, 2019. Overview and Executive Summary We have a leadership position in the development, manufacturing and marketing of rapid diagnostic testing solutions. These diagnostic testing solutions we separate into our four product categories: rapid immunoassay, Cardiometabolic immunoassay, molecular diagnostic solutions and specialized diagnostic solutions. We currently sell our products directly to end users and distributors, in each case, for professional use in physician offices, hospitals, clinical laboratories, reference laboratories, urgent care clinics, leading universities, retail clinics, pharmacies and wellness screening centers. We market our products through a network of distributors and through a direct sales force. We operate in one business segment that develops, manufactures and markets our four product categories. For the year ended December 31, 2020, total revenue increased 211% to $1,661.7 million as compared to the year ended December 31, 2019, and currency exchange rates had a minimal impact on the growth rate. Our revenues can be highly concentrated over a small number of products. For the year ended December 31, 2020, sales of our COVID-19 products accounted for 70% of total revenue. For the years ended December 31, 2020, 2019 and 2018, sales of our influenza products, as a percentage of total revenue, accounted for 8%, 26%, and 24% respectively. Additionally, a significant portion of our total revenue is from a relatively small number of distributors. Approximately 68%, 51% and 49% of our total revenue for the years ended December 31, 2020, 2019 and 2018, respectively, were related to sales through our four largest distributors. Our primary mission is to advance diagnostics to improve human health. Our strategy is to target market segments that represent significant total market opportunities, and in which we can be successful by applying our expertise and know-how to develop differentiated technologies and products. Our diagnostic testing solutions are designed to provide specialized results that serve a broad range of customers, by addressing the market requirements of ease of use, reduced cost, increased test accuracy and reduced time to result. Our current approach is to offer products in the following product categories: rapid immunoassay tests for use in physician offices, hospital laboratories and emergency departments, retail clinics, eye health settings, pharmacies, other urgent care or alternative site settings to include over the counter commencing in 2021; cardiometabolic immunoassay tests for use in physician offices, hospital laboratories and emergency departments, and other urgent care or alternative site settings; molecular diagnostic tests for use in hospitals, moderately complex physician offices, laboratories and other settings; and specialized diagnostic solutions, including direct DFA and culture-based tests for the clinical virology laboratory and other products serving the bone health, autoimmune and complement research communities. In order to achieve our mission, our strategy is to do the following: focus on innovative products and markets and leverage our core competency in new product development for our QuickVue(R), Sofia(R) and Triage(R) immunoassay brands and next-generation products; leverage our manufacturing expertise to address increasing demand for our products, including through expanded manufacturing capacity; utilize our molecular assay development competencies to further develop our molecular diagnostics franchise that includes distinct testing platforms, such as Lyra(R), Solana(R) and Savanna(R); and strengthen our position with distribution partners and our end-user customers to gain more emphasis on our products and enter new markets.
Our current initiatives to execute this strategy include the following:
Operations and Employee Safety
Results of Operations
Total Revenues The following table compares total revenues for the years ended December 31, 2020 and 2019 (in thousands, except percentages): For the year ended December 31, Increase (decrease) 2020 2019 $ % Rapid Immunoassay $ 1,144,831 $ 191,736 $ 953,095 497 % Cardiometabolic Immunoassay 242,933 266,505 (23,572) (9) % Molecular Diagnostic Solutions 222,964 21,716 201,248 927 % Specialized Diagnostic Solutions 50,940 54,933 (3,993) (7) % Total revenues $ 1,661,668 $ 534,890 $ 1,126,778 211 %
For the year ended December 31, 2020, total revenues increased 211% to $1,661.7 million. The Rapid Immunoassay category was the largest contributor to revenue growth, driven by the Sofia SARS Antigen and Sofia 2 Flu + SARS Antigen Immunoassays. Molecular Diagnostic Solutions sales grew $201.2 million over the prior year, driven by the Lyra SARS-CoV-2 assays. The decrease in Cardiometabolic Immunoassay and Specialized Diagnostic Solutions sales was mainly due to lower demand during the COVID-19 pandemic. Currency exchange rate impact for the period was favorable by $0.7 million, which had a minimal impact on the growth rate. See further discussion in Item 7A of this Annual Report for additional information related to our calculation and use of constant currency and constant currency revenue growth.
For the year ended December 31, 2020 2019 As a % of As a % of Increase (decrease) Operating total Operating total expenses revenues expenses revenues $ % Research and development $ 84,292 5 % $ 52,553 10 % $ 31,739 60 % Sales and marketing $ 133,957 8 % $ 111,114 21 % $ 22,843 21 % General and administrative $ 66,586 4 % $ 52,755 10 % $ 13,831 26 %
Research and Development Expense
For the year ended December 31, Increase (decrease) 2020 2019 $ % Interest and other expense, net $ 9,623 $ 14,790 $ (5,167) (35) % Loss on extinguishment of debt 10,384 748 9,636 1,288 % Total other expense, net $ 20,007 $ 15,538 $ 4,469 29 %
Interest and other expense, net decreased from $14.8 million to $9.6 million. Interest and other expense, net primarily relates to accretion of interest on the deferred consideration, coupon and accretion of interest related to our Convertible Senior Notes and interest and amortization of deferred financing costs associated with any debt outstanding under our Credit Agreement. The decrease in interest and other expense, net over the prior year was primarily due to lower debt balances under the Company's Revolving Credit Facility and Convertible Senior Notes and lower deferred consideration liability outstanding. Such decrease was partially offset by a $1.1 million change in fair value of derivative liabilities associated with our Convertible Senior Notes conversion recorded in the second quarter of 2020.
December 31, 2020 2019 Cash, cash equivalents, and restricted cash $ 489,941 $ 52,775 Amount available to borrow under the Revolving Credit Facility $ 175,000 $ 175,000 Working capital including cash, cash equivalents, and restricted cash $ 805,441 $ 96,336
As of December 31, 2020, we had $489.9 million in cash and cash equivalents, a $437.2 million increase from the prior year. Our cash requirements fluctuate as a result of numerous factors, such as cash generated from operations, progress in research and development or capital expansion projects and integration activities. We also intend to continue to evaluate candidates for new product lines, company or technology acquisitions or technology licensing and other strategic acquisitions and investments. If we decide to proceed with any such transactions, we may need to incur additional debt or issue additional equity to successfully complete the transactions.
Our future capital requirements and the adequacy of our available funds to service any long-term debt outstanding and to fund working capital expenditures and business development efforts will depend on many factors, including:
Feb 19, 2021
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